Tax Subsidized Employee Commuting Costs

The Federal government, Tri-Met, C-TRAN and other state programs for employers helps to offer employees some tax-favored subsidies to ease commuting in the Metro Area.

Essentially, the Federal government offers exclusion from taxable income a certain amount of reimbursement for qualified transportation costs of the employee. Qualified transportation costs include transit passes, parking and bicycle commuting.

The employer and employee decide how much will be withheld from the employee's pay as pre-tax dollars (up to the IRS exclusion limit, see below), how much money (if any) the employer will contribute, then the employer goes out and purchases the qualified transportation benefit.

In the case of transit passes, the employer can enroll in special Tri-Met and C-TRAN employer programs. For parking, the employer can contract from a local vendor for parking near its location. For bicycle commuting, the employer reimburses the employee directly after the employee provides receipts for qualified costs.

Exclusion from wages. You can generally exclude the value of transportation benefits that you provide to an employee during 2014 from the employee's wages up to the following limits.

$130 per month for combined commuter highway vehicle transportation and transit passes.
$250 per month for qualified parking.
For a calendar year, $20 multiplied by the number of qualified bicycle commuting months during that year for qualified bicycle commuting reimbursement of expenses incurred during the year.

Unfortunately, the above benefit does not apply to 2% or more shareholders of an S corporation.

Additional information:

Federal Transportation (Commuting Benefits):
http://www.irs.gov/publications/p15b/ar02.html#en_US_2014_publink1000193740

C-TRAN Employer Programs:
http://www.c-tran.com/fares/passes-and-employer-programs

Tri-Met:
http://trimet.org/employers/taxbreaks.htm

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